Piper Jaffray Agrees to Settle Charges on Ratings of Stocks
Published on New York Times December 31, 2002
The investment firm U.S. Bancorp Piper Jaffray, said today that it had agreed to pay $25 million and to change the way it does business to settle charges that it provided biased stock ratings.
Piper Jaffray said it had agreed in principle with federal and state regulators to resolve its part of an industrywide investigation into accusations that 12 firms misled investors by inflating stock ratings to help them investment banking business.
The case drew widespread attention when regulators uncovered e-mail messages at some firms in which analysts privately derided stocks they were recommending to the public.
Piper Jaffray and another investment banker, Thomas Weisel Partners, had held out while 10 others -- including Citigroup; Goldman, Sachs; and Credit Suisse First Boston -- agreed to pay $1.44 billion in a settlement on Dec. 20 with the New York State attorney general's office, which handled the negotiations. In addition to $900 million in fines, the firms will also pay $450 million over five years for independent research and $85 million for a nationwide investor education program.
In agreeing to the fines, the firms neither admitted nor denied that they had misled investors.
Piper Jaffray and Thomas Weisel had raised objections to the settlement and continued negotiations.
Besides the $25 million in fines, Piper Jaffray, which is based in Minneapolis, agreed to pay $1.5 million annually for five years. The firm said it had also agreed to make ''structural changes'' relating to its research and investment banking program, but it did not detail the changes.
Andrew S. Duff, the chief executive of Piper Jaffray, said in a statement: ''Since this process began, our regulators and we have shared the goals of reinforcing equity research independence, bringing about progressive changes to various industry practices and restoring confidence in the capital markets system. We believe this settlement will accomplish these goals.''
A Piper Jaffray spokeswoman, Erin Freeman, declined to comment further. The New York attorney general's office also did not immediately comment.